Acer Therapeutics (ACER) 10-Q 13 Nov 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 01, 2017
Document And Entity Information [Abstract]
Entity Registrant Name	Acer Therapeutics Inc.
Entity Central Index Key	1,069,308
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		6,450,766
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,017

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 8,404,332	$ 1,834,018
Other current assets	836,756	540,053
Total current assets	9,241,088	2,374,071
Property and equipment, net	5,062	6,217
Other assets:
Goodwill	7,647,266	272,315
In-process research and development	118,600	118,600
Deferred financing costs	0	1,901
Total assets	17,012,016	2,773,104
Current liabilities:
Accounts payable	539,440	383,411
Accrued expenses	1,711,300	438,028
Total liabilities	2,250,740	821,439
Series B Convertible Redeemable Preferred stock, $0.0001 par value; none and 970,238 shares authorized, issued and outstanding at September 30, 2017 and December 31, 2016, respectively	0	8,022,219
Series A Convertible Redeemable Preferred stock, $0.0001 par value; none and 638,416 shares authorized, issued and outstanding at September 30, 2017 and December 31, 2016, respectively	0	4,114,221
Convertible Redeemable Preferred stock	0	12,136,440
Stockholders' equity:
Preferred stock, no par value; authorized 10,000,000 shares; none issued and outstanding	0	0
Common stock, $0.01 par value; authorized 150,000,000 shares; 6,450,766 and 2,450,000 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	645	246
Additional paid in capital	36,098,222	1,172,200
Accumulated deficit	(21,337,591)	(11,357,221)
Total stockholders' equity (deficit)	14,761,276	(10,184,775)
Total liabilities, redeemable preferred stock and stockholders' equity (deficit)	$ 17,012,016	$ 2,773,104

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Preferred stock, no par value	$ 0	$ 0
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ .01	$ 0.01
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	6,450,766	2,450,000
Common stock, shares outstanding	6,450,766	2,450,000
Preferred Class A Redeemable[Member]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	0	638,416
Preferred stock, shares issued	0	638,416
Preferred stock, shares outstanding	0	638,416
Preferred Class B Redeemable[Member]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	0	970,238
Preferred stock, shares issued	0	970,238
Preferred stock, shares outstanding	0	970,238

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Operating expenses:
Research and development	$ 2,057,421	$ 1,610,822	$ 6,948,816	$ 3,510,118
General and administrative	1,302,401	274,512	2,792,424	1,054,479
Loss from operations	3,359,822	1,885,334	9,741,240	4,564,597
Other income (expense):
Interest income	2,993	136	4,819	174
Interest expense	(120,229)	0	(242,982)	0
Loss on disposal of asset	(967)	0	(967)	0
Total other income (expense), net	(118,203)	136	(239,130)	174
Net loss	$ (3,478,025)	$ (1,885,198)	$ (9,980,370)	$ (4,564,423)
Basic and diluted loss per share	$ (1.09)	$ (0.77)	$ (3.69)	$ (1.86)
Weighted average common shares outstanding - basic and diluted	3,199,796	2,450,000	2,702,678	2,450,000

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities
Net loss	$ (9,980,370)	$ (4,564,423)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash interest expense	242,982	0
Share-based compensation	136,617	39,031
Depreciation	2,711	2,627
Loss on disposal of asset	967	0
Write-off of deferred financing costs	1,901	69,896
Changes in:
Prepaid expenses	(291,703)	(36,902)
Accounts payable	156,029	(60,803)
Accrued expenses	(157,890)	(23,591)
Net cash used in operating activities	(9,888,756)	(4,574,165)
Cash flows from investing activities
Cash acquired in merger, net of payment in lieu of fractional shares	1,030,123	0
Purchase of property and equipment	(2,523)	(1,582)
Net cash provided by (used in) investing activities	1,027,600	(1,582)
Cash flows from financing activities
Proceeds from issuance of common stock	10,000,000	0
Proceeds from issues of Preferred Series B, net	0	7,994,834
Deferred financing costs	(68,530)	0
Proceeds from convertible notes payable	5,500,000	0
Net cash provided/(used) in financing activities	15,431,470	7,994,834
Net increase in cash and cash equivalents	6,570,314	3,419,087
Cash and cash equivalents at beginning of period	1,834,018	798,545
Cash and cash equivalents at end of period	8,404,332	4,217,632
Supplemental non-cash financing transactions:
Accretion of issuance costs on Series A Convertible Redeemable Preferred stock	51,943	11,130
Accretion of issuance costs on Series B Convertible Redeemable Preferred stock	127,780	0
Conversion of Series A Convertible Redeemable Preferred stock to common stock	4,166,164	0
Conversion of Series B Convertible Redeemable Preferred stock to common stock	8,149,995	0
Conversion of convertible notes payable and accrued interest to common stock	5,674,452	0
Issuance of common stock in Merger (Note 1)	$ 6,978,916	$ 0

1. Nature of Operations and Bas

1. Nature of Operations and Basis of Presentation	9 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Nature of Operations and Basis of Presentation	Business Acer Therapeutics Inc. (“Acer”) is a pharmaceutical company focused on the acquisition, development and commercialization of therapies for patients with serious rare and ultra-rare diseases with critical unmet medical need. Acer’s late-stage clinical pipeline includes two candidates for severe genetic disorders for which there are few or no FDA-approved treatments: EDSIVO™ (celiprolol) for vascular Ehlers-Danlos Syndrome (“vEDS”), and ACER-001 (a fully taste-masked, immediate release formulation of sodium phenylbutyrate) for urea cycle disorders (“UCD”) and Maple Syrup Urine Disease (“MSUD”). There are no FDA-approved drugs for vEDS and MSUD and limited options for UCD, which collectively impact more than 4,000 patients in the United States. Acer’s products have clinical proof-of-concept and mechanistic differentiation, and Acer intends to seek approval for them in the U.S. by using the regulatory pathway established under section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, or FFDCA, that allows an applicant to rely for approval at least in part on third-party data, which is expected to expedite the preparation, submission, and approval of a marketing application. Since its inception, Acer has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, acquiring operating assets and raising capital. The accompanying condensed consolidated financial statements for periods prior to August 2016 include the accounts of Acer and its wholly-owned subsidiaries, Acer Therapeutics Inc., a Delaware corporation, and Anchor Therapeutics, Inc. (“Anchor”) (collectively referred to as the “Company”). All intercompany balances and transactions are eliminated. See Merger and Reverse Stock Split section below. The Company is subject to a number of risks similar to other companies in its industry including rapid technological change, uncertainty of market acceptance of products, competition from larger companies with substitute products, availability of future financing and dependence on key personnel. Merger and Reverse Stock Split On September 19, 2017, Acer Therapeutics Inc., a Texas corporation, formerly known as Opexa Therapeutics, Inc. (the “Registrant”), completed its business combination with what was then known as “Acer Therapeutics Inc.,” a Delaware corporation (“Private Acer”), in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated as of June 30, 2017, by and among the Registrant, Opexa Merger Sub, Inc. (“Merger Sub”) and Private Acer (the “Merger Agreement”), pursuant to which Merger Sub merged with and into Private Acer, with Private Acer surviving as a wholly-owned subsidiary of the Registrant (the “Merger”). This transaction was approved by the Registrant’s shareholders at a special meeting of its shareholders on September 19, 2017 (the “Special Meeting”). Also on September 19, 2017, in connection with, and prior to the completion of, the Merger, the Registrant effected a 1-for-10.355527 reverse stock split of its then outstanding common stock (the “Reverse Split”) and immediately following the Merger, the Registrant changed its name to “Acer Therapeutics Inc.” pursuant to amendments to its certificate of formation filed with the Texas Secretary of State on September 19, 2017. All share numbers in this report have been adjusted to reflect the Reverse Split. Following the completion of the Merger, the business conducted by the Registrant became primarily the business conducted by Private Acer, which is a pharmaceutical company that acquires, develops and intends to commercialize therapies for patients with serious rare diseases with critical unmet medical need. Under the terms of the Merger Agreement, the Registrant issued shares of its common stock to Private Acer’s stockholders, at an exchange rate of one share of common stock (after giving effect to the Reverse Split and the conversion of Private Acer’s Series A and Series B preferred stock and convertible debt) in exchange for each share of Private Acer common stock outstanding immediately prior to the Merger. The exchange rate was determined through arm’s length negotiations between the Registrant and Private Acer. The Registrant also assumed all issued and outstanding stock options under the Acer Therapeutics Inc. 2013 Stock Incentive Plan, with such stock options henceforth representing the right to purchase a number of shares of the Registrant’s common stock equal to the number of shares of Private Acer’s common stock previously represented by such stock options. Immediately after the Merger, (i) there were approximately 6.5 million shares of the Registrant’s common stock outstanding; (ii) the former Private Acer stockholders, including investors in the Concurrent Financing (as defined below), owned approximately 89% of the outstanding common stock of the Registrant; and (iii) the Registrant’s shareholders immediately prior to the Merger, whose shares of the Registrant’s common stock remain outstanding after the Merger, owned approximately 11% of the outstanding common stock of the Registrant. The issuance of the shares of the Registrant’s common stock to the former stockholders of Private Acer was registered with the U.S. Securities and Exchange Commission (the “SEC”) on a Registration Statement on Form S-4 (Reg. No. 333-219358) (the “Registration Statement”). Immediately prior to the Merger, Private Acer issued and sold an aggregate of approximately $15.7 million (inclusive of the conversion of approximately $5.7 million of principal and accrued interest on outstanding convertible promissory notes issued by Private Acer) of shares of Private Acer’s common stock (the “Concurrent Financing”) to certain current stockholders of Private Acer and certain new investors at a per share price of $9.47. Accounting principles generally accepted in the United States require that a company whose security holders retain the majority voting interest in the combined business be treated as the acquirer for financial reporting purposes. Accordingly, the Merger was accounted for as a reverse acquisition whereby Private Acer was treated as the acquirer for accounting and financial reporting purposes. As such, references to the results of operations for the nine months ended September 30, 2017 include the historical results of Private Acer from January 1, 2017 through September 18, 2017 and include the consolidated results of the combined company from September 19, 2017 through September 30, 2017. The Registrant’s common stock continued to trade on a pre-split basis through the close of business on Wednesday, September 20, 2017 on The NASDAQ Capital Market under the ticker symbol “OPXA.” Commencing with the open of trading on Thursday, September 21, 2017, the post-split shares began trading on The NASDAQ Capital Market under the ticker symbol “ACER.” On September 21, 2017, the Registrant’s Series M Warrants, previously trading through the close of business on Wednesday, September 20, 2017 under the ticker symbol “OPXAW,” commenced trading on The NASDAQ Capital Market, under the ticker symbol “ACERW.” The Registrant’s common stock and Series M Warrants have new CUSIP numbers of 00444P 108 and 00444P 116, respectively. Private Acer was incorporated on December 26, 2013 The accompanying condensed consolidated financial statements include the activities of Private Acer as of and for the respective periods presented. Basis of Presentation The accompanying condensed consolidated balance sheet as of September 30, 2017 and the condensed consolidated statements of operations and cash flows for the three and nine months ended September 30, 2017 and 2016 are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-X. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s financial position as of September 30, 2017, the results of operations for the three and nine months ended September 30, 2017 and 2016, and the cash flows for the nine months ended September 30, 2017 and 2016. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2016 included herein was derived from the audited consolidated financial statements as of that date. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Registration Statement. Going Concern Uncertainty The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has experienced recurring losses since inception. The Company has relied on raising capital to finance its operations. The Company plans to raise capital through equity and/or debt financings. There is no assurance, however, that the Company will be able to raise sufficient capital to fund its operations on terms that are acceptable, or that its operations will ever be profitable. There is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the accompanying financial statements are available to be issued and these financial statements do not include any adjustments relating to the recoverability of recorded asset amounts that might be necessary as a result of the above uncertainty. Based on available resources, the Company believes that its cash and cash equivalents currently on hand are sufficient to fund its anticipated operating and capital requirements through the first half of 2018.

2. Significant Accounting Polic

2. Significant Accounting Polices	9 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Significant Accounting Polices	A summary of the significant accounting policies followed by the Company in the preparation of the accompanying condensed consolidated financial statements follows: Business Combinations Assets acquired and liabilities assumed as part of a business acquisition are generally recorded at their fair value at the date of acquisition. The excess of purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Determining fair value of identifiable assets, particularly intangibles, and liabilities acquired also requires management to make estimates, which are based on all available information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated with an asset. Accounting for business acquisitions may require management to make judgments and estimates as to fair value of consideration transferred. This judgment and determination may affect the amount of consideration paid that is allocable to assets and liabilities acquired in the business purchase transaction. Share-Based Compensation The Company records share-based payments at fair value. The measurement date for compensation expense related to employee awards is generally the date of the grant. The measurement date for compensation expense related to nonemployee awards is generally the date that the performance of the awards is completed and, until such time, the fair value of the awards is remeasured at the end of each reporting period. Accordingly, the ultimate expense is not fixed until such awards are vested. The fair value of awards, net of expected forfeitures, is recognized as expense in the statement of operations over the requisite service period, which is generally the vesting period. The fair value of options is calculated using the Black-Scholes option pricing model. This option valuation model requires input of assumptions including, among others, the volatility of stock price, the expected term of the option, and the risk-free interest rate. Use of Estimates The Company’s accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Estimates having relatively higher significance include the accounting for acquisitions, stock-based compensation, and income taxes. Actual results could differ from those estimates and changes in estimates may occur. Basic and Diluted Net Loss per Common Share Basic and diluted net loss per common share is computed by dividing net loss in each period by the weighted average number of shares of common stock outstanding during such period. For the periods presented, common stock equivalents, consisting of options, convertible redeemable preferred stock, warrants and convertible notes payable, were not included in the calculation of the diluted loss per share because they were anti-dilutive. Recently Adopted Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accountin Recently Issued Accounting Pronouncements Revenue from Contracts with Customers In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), or ASU 2014-09 Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies identifying performance obligations and licensing implementation guidance and illustrations in ASU 2014-09 Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments (SEC Update) The Revenue ASUs provide an accounting standard for a single comprehensive model for use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard is effective for interim and annual periods beginning after December 15, 2017, with an option to early adopt for interim and annual periods beginning after December 15, 2016. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (the full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). The Company will adopt the new standard effective January 1, 2018 under the modified retrospective method. The Company has allocated internal resources to the implementation and is in the process of determining the impact of the Revenue ASUs on its financial statements; however, the adoption of the Revenue ASUs may have a material impact on revenue recognition, its notes to consolidated financial statements and its internal controls over financial reporting. Currently, The Company does not have sources of revenue but future arrangements may be impacted by the adoption of the Revenue ASUs noted above. Other Recent Accounting Pronouncements In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350). In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception (Update) Distinguishing Liabilities from Equity Distinguishing Liabilities from Equity

3. Purchase Accounting

3. Purchase Accounting	9 Months Ended
	Sep. 30, 2017
Purchase Accounting
Purchase Accounting	The Merger was accounted for using the purchase method of accounting as a reverse acquisition. In a reverse acquisition, the post-acquisition net assets of the surviving combined company includes the historical cost basis of the net assets of the accounting acquirer (Private Acer) plus the fair value of the net assets of the accounting acquiree (the Registrant). Further, under the purchase method, the purchase price is allocated to the assets acquired, liabilities assumed, and identifiable intangible assets based on their estimated fair values, with the remaining excess purchase price over net assets acquired allocated to goodwill. The fair value of the consideration transferred in the Merger was $6,978,916 and was calculated as the number of shares of common stock that Private Acer issued (adjusted for the exchange ratio) in order for the Registrant’s shareholders to hold an 11% equity interest in the combined company post-acquisition, multiplied by the estimated fair value of Private Acer’s common stock on the acquisition date. The estimated fair value of Private Acer’s common stock was based on the offering price of the common stock sold in the private placement which was both completed concurrently with and conditioned upon the closing of the Merger. This price was determined to be the best indication of fair value on that date since the price was based on an arm’s length negotiation with a group consisting of both new and existing investors of Private Acer that had been advised of the pending Merger and assumed similar liquidity risk as those investors holding the majority of shares being valued as purchase consideration. The following table summarizes the Company’s determination of fair values of the assets acquired and the liabilities assumed as of the date of acquisition. Consideration - issuance of securities and cash paid for fractional shares $ 7,007,069 Assets acquired and liabilities assumed: Cash $ 1,058,276 Other assets 5,000 Accrued liabilities (1,431,158 ) Goodwill 7,374,951 Total purchase price $ 7,007,069 The Company determined that the acquired legacy technology of the Registrant had no value as of the date of the acquisition. Goodwill represents the excess of the purchase price (consideration paid plus net liabilities assumed) of an acquired business over the fair value of the underlying net tangible and intangible assets. Goodwill includes the value of the Registrant’s standing as a public entity. None of the goodwill associated with the Merger is deductible for income tax purposes. There were no changes in goodwill during the period ended September 30, 2017, after the initial purchase accounting. The Company is required to perform an annual impairment test related to goodwill which is performed in the fourth quarter of each year, or sooner if changes in circumstances suggest that the carrying value of an asset may not be recoverable. Unaudited pro forma operating results, assuming the Merger occurred as of January 1, 2016, are as follows: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Net loss $ (3,478,025 ) $ (1,885,198 ) $ (9,980,370 ) $ (4,564,423 ) Net loss per share - basic and diluted $ (1.09 ) $ (0.77 ) $ (3.69 ) $ (1.86 )

4. Property and Equipment

4. Property and Equipment	9 Months Ended
	Sep. 30, 2017
Property And Equipment
Property and Equipment	Property and equipment consisted of the following at September 30, 2017 and December 31, 2016: September 30, 2017 December 31, 2016 Computer hardware and software $ 10,706 $ 10,862 Less accumulated depreciation (5,645 ) (4,645 ) $ 5,062 $ 6,217

5. Accrued Expenses

5. Accrued Expenses	9 Months Ended
	Sep. 30, 2017
Accrued Expenses
Accrued Expenses	Accrued expenses consisted of the following at September 30, 2017 and December 31, 2016: September 30, 2017 December 31, 2016 Accrued legal $ 248,710 $ 21,477 Accrued pre-commercial costs 317,567 — Accrued consulting 94,169 13,105 Accrued audit and tax 92,437 39,820 Accrued license fees 893,949 205,444 Accrued contract manufacturing — 126,700 Accrued contract research 35,657 16,800 Accrued miscellaneous expenses 28,811 14,682 $ 1,711,300 $ 438,028

6. Convertible Notes Payable

6. Convertible Notes Payable	9 Months Ended
	Sep. 30, 2017
Notes Payable [Abstract]
Convertible Notes Payable	On March 22, 2017, Private Acer issued senior secured convertible notes payable (the “2017 Notes”) to existing investors and a vendor in the aggregate principal amount of $3,125,000. The 2017 Notes accrued interest at 10% per annum and matured on the earlier of (i) March 22, 2018 (the “Maturity Date”) or (ii) upon a Change in Control of Private Acer, as defined therein. On May 31, 2017, Private Acer issued additional 2017 Notes to existing investors and a vendor in the aggregate principal amount of $2,375,000. The 2017 Notes were convertible into common stock upon a Qualified Financing (as defined therein), a Change in Control, or an optional conversion by the holder. Conversion upon a Qualified Financing was at a price per share equal to the price per share paid for the shares sold in the Qualified Financing less a discount of: (i) 0%, if a Qualified Financing occurred on or before June 30, 2017; (ii) 10%, if a Qualified Financing occurred after June 30, 2017 but on or before September 1, 2017; or (iii) 20%, if a Qualified Financing occurred after September 1, 2017. Conversion upon a Change in Control was at the discretion of the holder such that Private Acer would pay each holder the outstanding balance on their respective note or the note would be converted at a price per share equal to the lesser of $16.57 and the price per share of common stock paid to the holders of the common stock in such Change in Control. Conversion under an optional conversion by the holder was at a price per share of $16.57 based on the outstanding balance of the note. Upon the issuance of the 2017 Notes, Private Acer evaluated all terms of the 2017 Notes, including the Change in Control provision, to identify any embedded features that required bifurcation and recording as derivative instruments. Private Acer determined that there were no such features requiring separate accounting. In connection with the 2017 Notes, Private Acer incurred debt issuance costs of $68,530 and recorded them as a debt discount. During the nine months ended September 30, 2017, the Company recognized $242,982 of interest expense, which includes $68,530 in amortization of debt discount and $174,452 of accrued interest on the 2017 Notes. The principal of $5,500,000 and accrued interest of $174,452 on the 2017 Notes converted into 599,201 fully-paid shares of common stock at the time of the Merger described in Note 1, with no discount on the conversion.

7. Commitments

7. Commitments	9 Months Ended
	Sep. 30, 2017
Commitments
Commitments	License Agreements In August 2016, Private Acer signed an agreement with the Greater Paris University Hospitals AP-HP (via its Department of Clinical Research and Development) granting Private Acer exclusive worldwide rights to access and use data from a randomized controlled clinical study of celiprolol. The Company will use this pivotal clinical data to support a New Drug Application (“NDA”) regulatory filing for its lead product, celiprolol, for the treatment of vEDS. The agreement requires Private Acer to make certain upfront payments to AP-HP, as well as reimburse certain costs, and make payments upon achievement of defined milestones and payment of royalties on net sales of celiprolol over the royalty term. In April 2014, Private Acer obtained exclusive rights to intellectual property relating to ACER-001 and preclinical and clinical data, through an exclusive license agreement with Baylor College of Medicine (“BCM”). Under the terms of the agreement, as amended, Private Acer has worldwide exclusive rights to develop, manufacture, use, sell and import Licensed Products as defined in the agreement. The license agreement requires Private Acer to make certain upfront and annual payments to BCM, as well as reimburse certain legal costs, and make payments upon achievement of defined milestones and payment of royalties on net sales of any developed product over the royalty term. Litigation From time to time, the Company or its subsidiaries may become involved in litigation or proceedings relating to claims arising from the ordinary course of business. On September 27, 2017, Piper Jaffray & Co. filed a lawsuit against Private Acer, Piper Jaffray & Co. v. Acer Therapeutics Inc., Index No. 656055/2017, in the Supreme Court of the State of New York, County of New York. The complaint alleges that Private Acer breached its obligations to Piper Jaffray & Co. pursuant to an August 30, 2016 engagement letter between the parties and an April 28, 2017 addendum thereto by failing to pay Piper Jaffray & Co. (i) a fee of $1,097,207 in connection with the financing which closed on September 19, 2017 for aggregate consideration of approximately $15.7 million (including the conversion of the 2017 Notes described in Note 6) and (ii) $67,496 in reimbursement for expenses incurred by Piper Jaffray & Co. pursuant to the engagement letter. On November 10, 2017, Private Acer filed an answer and counterclaim in the lawsuit, denying Piper Jaffray & Co.’s breach of contract allegation, asserting several defenses, and bringing several counterclaims, including claims for breach of contract and breach of the duty of good faith and fair dealing. The Company has not recorded a liability as of September 30, 2017 because a potential loss is not probable or reasonably estimable given the preliminary nature of the proceedings.

8. Stockholders' Equity

8. Stockholders' Equity	9 Months Ended
	Sep. 30, 2017
Equity [Abstract]
Stockholders' Equity	Immediately prior to the consummation of the Merger described in Note 1, (i) Private Acer’s Series A Convertible Redeemable Preferred stock and Series B Convertible Redeemable Preferred stock were converted into 638,416 and 970,238 shares of common stock, respectively, (ii) Private Acer’s 2017 Notes and accrued interest totaling $5,674,452 were converted into 599,201 shares of common stock, and (iii) 1,055,961 shares of common stock were sold for $9.47 per share generating $10,000,000 of gross proceeds. At the closing of the Merger, 736,950 shares of common stock were held by existing shareholders of the Registrant. 2013 Stock Incentive Plan Private Acer’s 2013 Stock Incentive Plan, as amended (the “2013 Plan”), which was assumed by Acer in connection with the Merger, provides for the granting of up to 165,000 shares of common stock as incentive or non-qualified stock options and/or restricted common stock to employees, officers, directors, consultants and advisers. Option awards are generally granted with an exercise price equal to the fair value of the common stock at the date of grant and have contractual terms of 10 years. A summary of option activity under the 2013 Plan for the nine months ended September 30, 2017 is as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Options outstanding at December 31, 2016 122,000 $ 2.55 — Granted 48,625 7.21 — Exercised — — — Cancelled/forfeited (5,625 ) 2.55 — Options outstanding at September 30, 2017 165,000 $ 3.92 7.54 Options exercisable at September 30, 2017 123,562 $ 3.47 8.46 At September 30, 2017, there was approximately $99,600 of unrecognized compensation expense related to the share-based compensation arrangements granted under the 2013 Plan and the average remaining vesting period is 0.58 years. The weighted average grant date fair value of options granted during the nine months ended September 30, 2017 was $3.76. 2010 Stock Incentive Plan Acer’s Amended and Restated 2010 Stock Incentive Plan, as amended (the “2010 Plan”), provides for the granting of up to 470,000 shares of common stock as incentive or non-qualified stock options, stock appreciation rights, restricted stock units and/or restricted common stock to employees, officers, directors, consultants and advisers. Option awards are generally granted with an exercise price equal to the fair value of the common stock at the date of grant and have contractual terms of 10 years. All outstanding and unexercised equity awards (representing 22,061 underlying shares) under the 2010 Plan were cancelled in connection with the Merger. Warrants A summary of warrant activity for the three months ended September 30, 2017 Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (# years) Intrinsic Value Assumed in the Merger at September 19, 2017 3 17,630 $ 123.61 .54 — Outstanding and exercisable at September 30, 2017 317,630 $ 123.61 .54 —

9. Net Loss Per Share

9. Net Loss Per Share	9 Months Ended
	Sep. 30, 2017
Net Loss Per Share
Net Loss Per Share	Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding. Diluted net loss per share is computed similarly to basic net loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted net loss per share is the same as basic net loss per common share, since the effects of potentially dilutive securities are antidilutive. As of September 30, 2017 and 2016, the number of shares of common stock underlying potentially dilutive securities include: September 30, 2017 2016 Convertible redeemable preferred stock — 638,416 Warrants 317,630 — Options to purchase common stock 165,000 122,000 Total 482,630 760,416

10. Subsequent Events

10. Subsequent Events	9 Months Ended
	Sep. 30, 2017
Subsequent Events [Abstract]
Subsequent Events	On October 4, 2017, the Company’s Board of Directors granted non-qualified stock options under the 2010 Plan to purchase an aggregate of (i) 218,600 shares of the Company’s common stock to executive officers and employees and (ii) 30,000 shares of the Company’s common stock to outside non-employee directors, all at an exercise price of $15.34 per share. Stock options granted to executive officers and employees vest over a four-year period, with 25% vesting on the one-year anniversary of the grant date and the remaining 75% vesting quarterly over the remaining three years, assuming continued service, and with vesting acceleration in full immediately prior to a change in control. Stock options granted to outside non-employee directors vest either (a) in full on the one-year anniversary of the grant date, assuming continued service, for awards to continuing directors, with vesting acceleration in full immediately prior to a change in control, or (b) quarterly over a three-year period, assuming continued service, for awards to new directors, with vesting acceleration in full immediately prior to a change in control. On November 8, 2017, the Company’s Board of Directors granted a non-qualified stock option to purchase 25,000 shares of the Company’s common stock to an employee with an exercise price of $17.51, which vests over a four-year period, with 25% vesting on the one-year anniversary of the grant date and the remaining 75% vesting quarterly over the remaining three years, assuming continued service, and with vesting acceleration in full immediately prior to a change in control.

2. Significant Accounting Pol16

2. Significant Accounting Polices (Policies)	9 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Share-Based Compensation	The Company records share-based payments at fair value. The measurement date for compensation expense related to employee awards is generally the date of the grant. The measurement date for compensation expense related to nonemployee awards is generally the date that the performance of the awards is completed and, until such time, the fair value of the awards is remeasured at the end of each reporting period. Accordingly, the ultimate expense is not fixed until such awards are vested. The fair value of awards, net of expected forfeitures, is recognized as expense in the statement of operations over the requisite service period, which is generally the vesting period. The fair value of options is calculated using the Black-Scholes option pricing model. This option valuation model requires input of assumptions including, among others, the volatility of stock price, the expected term of the option, and the risk-free interest rate.
Business Combinations	Assets acquired and liabilities assumed as part of a business acquisition are generally recorded at their fair value at the date of acquisition. The excess of purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Determining fair value of identifiable assets, particularly intangibles, and liabilities acquired also requires management to make estimates, which are based on all available information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated with an asset. Accounting for business acquisitions may require management to make judgments and estimates as to fair value of consideration transferred. This judgment and determination may affect the amount of consideration paid that is allocable to assets and liabilities acquired in the business purchase transaction.
Use of Estimates	The Company’s accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Estimates having relatively higher significance include the accounting for acquisitions, stock-based compensation, and income taxes. Actual results could differ from those estimates and changes in estimates may occur.
Basic and Diluted Net Loss per Common Share	Basic and diluted net loss per common share is computed by dividing net loss in each period by the weighted average number of shares of common stock outstanding during such period. For the periods presented, common stock equivalents, consisting of options, convertible redeemable preferred stock, warrants and convertible notes payable, were not included in the calculation of the diluted loss per share because they were anti-dilutive.
Recently Adopted and Issued Accounting Pronouncements	Recently Adopted Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accountin Recently Issued Accounting Pronouncements Revenue from Contracts with Customers In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), or ASU 2014-09 Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies identifying performance obligations and licensing implementation guidance and illustrations in ASU 2014-09 Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments (SEC Update) The Revenue ASUs provide an accounting standard for a single comprehensive model for use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard is effective for interim and annual periods beginning after December 15, 2017, with an option to early adopt for interim and annual periods beginning after December 15, 2016. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (the full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). The Company will adopt the new standard effective January 1, 2018 under the modified retrospective method. The Company has allocated internal resources to the implementation and is in the process of determining the impact of the Revenue ASUs on its financial statements; however, the adoption of the Revenue ASUs may have a material impact on revenue recognition, its notes to consolidated financial statements and its internal controls over financial reporting. Currently, The Company does not have sources of revenue but future arrangements may be impacted by the adoption of the Revenue ASUs noted above. Other Recent Accounting Pronouncements In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350). In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception (Update) Distinguishing Liabilities from Equity Distinguishing Liabilities from Equity

3. Purchase Accounting (Tables)

3. Purchase Accounting (Tables)	9 Months Ended
	Sep. 30, 2017
Purchase Accounting Tables
Fair values of acquired assets and liabilities	Consideration - issuance of securities and cash paid for fractional shares $ 7,007,069 Assets acquired and liabilities assumed: Cash $ 1,058,276 Other assets 5,000 Accrued liabilities (1,431,158 ) Goodwill 7,374,951 Total purchase price $ 7,007,069
Pro forma	Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Net loss $ (3,478,025 ) $ (1,885,198 ) $ (9,980,370 ) $ (4,564,423 ) Net loss per share - basic and diluted $ (1.09 ) $ (0.77 ) $ (3.69 ) $ (1.86 )

4. Property and Equipment (Tabl

4. Property and Equipment (Tables)	9 Months Ended
	Sep. 30, 2017
Property And Equipment Tables
Property and equipment	September 30, 2017 December 31, 2016 Computer hardware and software $ 10,706 $ 10,862 Less accumulated depreciation (5,645 ) (4,645 ) $ 5,062 $ 6,217

5. Accrued Expenses (Tables)

5. Accrued Expenses (Tables)	9 Months Ended
	Sep. 30, 2017
Accrued Expenses Tables
Accrued expenses	September 30, 2017 December 31, 2016 Accrued legal $ 248,710 $ 21,477 Accrued pre-commercial costs 317,567 — Accrued consulting 94,169 13,105 Accrued audit and tax 92,437 39,820 Accrued license fees 893,949 205,444 Accrued contract manufacturing — 126,700 Accrued contract research 35,657 16,800 Accrued miscellaneous expenses 28,811 14,682 $ 1,711,300 $ 438,028

8. Stockholders' Equity (Tables

8. Stockholders' Equity (Tables)	9 Months Ended
	Sep. 30, 2017
Stockholders Equity Tables
Stock option and warrant activity	Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Options outstanding at December 31, 2016 122,000 $ 2.55 — Granted 48,625 7.21 — Exercised — — — Cancelled/forfeited (5,625 ) 2.55 — Options outstanding at September 30, 2017 165,000 $ 3.92 7.54 Options exercisable at September 30, 2017 123,562 $ 3.47 8.46 Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (# years) Intrinsic Value Assumed in the Merger at September 19, 2017 3 17,630 $ 123.61 .54 — Outstanding and exercisable at September 30, 2017 317,630 $ 123.61 .54 —

9. Net Loss Per Share (Tables)

9. Net Loss Per Share (Tables)	9 Months Ended
	Sep. 30, 2017
Net Loss Per Share Tables
Shares potentially dilutive	September 30, 2017 2016 Convertible redeemable preferred stock — 638,416 Warrants 317,630 — Options to purchase common stock 165,000 122,000 Total 482,630 760,416

3. Purchase Accounting (Details

3. Purchase Accounting (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Assets acquired and liabilities assumed:
Goodwill	$ 7,647,266	$ 272,315
Acquisition Date
Consideration - issuance of securities and cash paid for fractional shares	7,007,069
Assets acquired and liabilities assumed:
Cash	1,058,276
Other assets	5,000
Accrued liabilities	(1,431,158)
Goodwill	7,374,951
Total purchase price	$ 7,007,069

3. Purchase Accounting (Detai23

3. Purchase Accounting (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Purchase Accounting Details 1
Net loss	$ (3,478,025)	$ (1,885,198)	$ (9,980,370)	$ (4,564,423)
Net loss per share - basic and diluted	$ (1.09)	$ (0.77)	$ (3.69)	$ (1.86)

4. Property and Equipment (Deta

4. Property and Equipment (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Property and equipment, net	$ 5,062	$ 6,217
Computer hardware and software
Property and equipment, gross	10,706	10,862
Accumulated depreciation	(5,645)	(4,645)
Property and equipment, net	$ 5,062	$ 6,217

5. Accrued Expenses (Details)

5. Accrued Expenses (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Accrued expenses	$ 1,711,300	$ 438,028
Legal
Accrued expenses	317,567	21,477
Pre-commercial costs
Accrued expenses	94,169	0
Consulting
Accrued expenses	92,437	13,105
Audit and tax
Accrued expenses	893,949	39,820
License fees
Accrued expenses	0	205,444
Contract manufacturing
Accrued expenses	35,657	126,700
Contract research
Accrued expenses	28,811	16,800
Miscellaneous expenses
Accrued expenses	$ 1,711,300	$ 14,682

6. Convertible Notes Payable (D

6. Convertible Notes Payable (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Convertible Notes Payable Details Narrative
Interest expense	$ 120,229	$ 0	$ 242,982	$ 0
Amortization of financing costs	$ 68,530		$ 68,530

8. Stockholders' Equity (Detail

8. Stockholders' Equity (Details)	9 Months Ended
	Sep. 30, 2017$ / sharesshares
Options
Number of Shares, Outstanding at beginning of period | shares	122,000
Options, Granted | shares	48,625
Options, Exercised | shares	0
Options, Forfeited and canceled | shares	(5,625)
Number of Shares, Outstanding at end of period | shares	165,000
Number of Shares, Exercisable at end of period | shares	123,562
Weighted Average Exercise Price, Options
Weighted average exercise price, Outstanding at beginning of period | $ / shares	$ 2.55
Weighted average exercise price options, Granted | $ / shares	7.21
Weighted average exercise price options, Exercised | $ / shares	0
Weighted average exercise price options, Forfeited and canceled | $ / shares	2.55
Weighted average exercise price, Outstanding at end of period | $ / shares	3.92
Weighted average exercise price, Exercisable at end of period | $ / shares	$ 3.47
Weighted Average Remaining Contract Term, Options
Weighted Average Remaining Contract Term, Outstanding at end of period	7 years 6 months 14 days
Weighted Average Remaining Contract Term, Exercisable	8 years 5 months 16 days

8. Stockholders' Equity (Deta28

8. Stockholders' Equity (Details 1) - Warrants	9 Months Ended
	Sep. 30, 2017USD ($)$ / sharesshares
Class of Warrant or Right [Line Items]
Number of Shares, Outstanding at beginning of period | shares	0
Warrants, Assumed | shares	317,630
Number of Shares, Outstanding at end of period | shares	317,630
Number of Shares, Exercisable at end of period | shares	317,630
Weighted Average Exercise Price, Warrants
Weighted average exercise price, Outstanding at beginning of period | $ / shares	$ 0
Weighted average exercise price warrants, Assumed | $ / shares	123.61
Weighted average exercise price, Outstanding at end of period | $ / shares	123.61
Weighted average exercise price, Exercisable at end of period | $ / shares	$ 123.61
Weighted Average Remaining Contract Term, Warrants
Weighted Average Remaining Contract Term, Assumed	6 months 14 days
Weighted Average Remaining Contract Term, Outstanding at end of period	6 months 14 days
Weighted Average Remaining Contract Term, Exercisable	6 months 14 days
Intrinsic Value, Warrants
Aggregate Intrinsic Value, Assumed | $	$ 0
Aggregate Intrinsic Value, Outstanding at end of period | $	0
Exercisable Aggregate Intrinsic Value | $	$ 0

8. Stockholders' Equity (Deta29

8. Stockholders' Equity (Details Narrative)	Sep. 30, 2017USD ($)
Stockholders Equity Details Narrative
Unamortized stock-based compensation expense	$ 99,600

9. Net Loss Per Share (Details)

9. Net Loss Per Share (Details) - shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Common stock dilutive securities	482,630	760,416
Convertible redeemable preferred stock
Common stock dilutive securities	0	638,416
Warrants
Common stock dilutive securities	317,630	0
Options to purchase common stock
Common stock dilutive securities	165,000	122,000